- US Retail Sales saw a slight uptick in June.
- USD’s overall outlook still remains skewed to the downside due to dovish bets on the Fed.
- Markets remain confident about a September cut.
On Tuesday, the US Dollar, as measured by the DXY index, saw some gains following promising results in June’s Retail Sales figures reported during the European session.
That being said, the US economic outlook shows indications of disinflation, bolstering the markets’ confidence in a rate cut in September. Federal Reserve officials, however, are maintaining a cautious stance, emphasizing their reliance on data before making any significant moves.
Daily digest market movers: DXY sees some light following encouraging Retail Sales, outlook still negative
- As the week began, the USD found itself under pressure due to the effect of the previous week’s inflation statistics, which fueled confidence among traders for a likely rate cut in September.
- On the data front, retail sales remained flat at 0.0%, though the previously reported increase of 0.1% was revised upward to 0.3%.
- Retail Sales ex Autos rose by 0.4% after the 0.1% decline in May. That same -0.1% has been revised to 0.1%.
- The CME FedWatch Tool broadly supports the notion of a rate cut in September, with the odds currently standing over 85% for a 25-basis-point cut.
DXY Technical Outlook: Bearish attitude steady while bulls make a stride to recover the 200-day SMA
The outlook for the USD remains bearish despite the DXY index regaining the 200-day Simple Moving Average (SMA). Technical indicators such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) are both deep in negative terrain, suggesting it’s the seller’s time now.
Despite losing more than 0.80% towards the end of last week, a slight upward correction may occur. Nonetheless, the bullish momentum gained on Tuesday is fragile, making the overall technical outlook decidedly bearish.
